Four LEPs are set to replace the disbanded NWDA but, with Lancashire’s bids not making the grade, has the sun set on parts of the region’s regeneration plans? By Karen Day
The future of economic development in the North West is just starting to become clear after the government’s flurry of abolition and cuts.
Four local enterprise partnerships will replace the Northwest Regional Development Agency in the first instance and will compete for a national funding pot that has shrunk by two-thirds.
The emerging picture does have positive glimmers but the fear is that, in this fiercely competitive new funding environment, the towns in the region most in need of public investment will struggle against the might of the city regions.
The North West has seen huge success in its economic development and regeneration over the past decade with, for instance, the revitalisation of parts of Liverpool and Manchester. But the region, like many, has been highly dependent on public investment.
As the NWDA announced its last budget in June, it also rejected funding bids for more than 100 projects, including several for land remediation. It also announced the end of operational funding for the region’s six urban regeneration companies from March 2011 and up to 30 other partner bodies.
The demise of the NWDA coincides with the end of the housing market renewal fund, which largely benefitted the region, and a significant cut in the budget of the Homes and Communities Agency, which often partnered the NWDA.
Profound loss
The loss of this level of funding is likely to be profound and there are already concerns that the inherent “fairness” of the NWDA – which distributed resources across the region – will be lost.
Peter Skelton, strategic development director with Lambert Smith Hampton, says: “The problem in the North West, which is very diverse, is that there are lots of places where development can only be stimulated by public sector support.
“There are towns that have been badly affected by the downturn and will take longer to recover. You do have to stimulate where necessary and what the NWDA did does need to continue.”
Skelton adds that developers will focus on locations where they are sure they can make a profit, leaving many parts of the region vulnerable to economic decline.
The announcement of the successful LEP bids – Greater Manchester, the Liverpool City Region, Cheshire & Warrington and Cumbria – has further added to these concerns. The government rejected the three bids covering Lancashire and told the bidders to rethink their plans, leaving the county without an official body and lagging in the race to bid for money under the new £1.4bn UK Regional Growth Fund. The first round closes in January.
Ministers were clearly unimpressed with the very public squabbling across the county, with Fylde Coast and Pennine Lancashire refusing to partner with the rest of Lancashire. Geoff Driver, leader of the county council, says it is vital that Lancashire does not lose out, and is leading a fresh drive to bid for a cross-county LEP.
Fylde Coast, however, remains defiant. Helen France, executive director for regeneration and tourism at Blackpool council – part of the bid – says it will not stop the councils creating the partnership they want and that the proposed LEP will make a bid for the growth fund none the less.
Gerry Hughes, director of planning, development and regeneration in GVA Grimley’s Manchester office, says: “The cuts in public spending will have a major effect on parts of the region outside the core cities and it’s a double whammy that Lancashire hasn’t been successful in getting a LEP approved.
“The bidders should have joined up; there’s not enough economic critical mass [for the individual bids] to be credible and the private sector needs to be incentivised to invest in places like Blackburn or Burnley.”
Slight advantage
If Lancashire does get its LEP act together, it may have a slight advantage over some areas in England, with the government signalling that it will favour northern towns previously dependent on the public sector in its Regional Growth Fund.
Ministers added an extra £400,000 to the fund in the Comprehensive Spending Review, although the total £1.4bn pot spread over three years pales in comparison with the £1.1bn spent on the RDAs in2010-11. It will be chaired by Lord Heseltine, who has also made it clear that only bids with strong private- sector backing will be considered.
Funding for the region will also be bolstered by two urban development funds established under the EU’s Jessica initiative. This will provide repayable loans, equity or income guarantees rather than grants for economic development schemes across the region.
The North West Fund, known as Evergreen, has already been set up with an initial £20m, with cash from the European Investment Bank and the NWDA. The expectation is that with private and public investment this could swell to £350m by 2015. The Merseyside fund will be managed by a consortium led by Aviva Igloo Regeneration.
GVA Grimley’s Hughes says the fund will be one of a number of financial tools to aid the region: “It does have its limitations,” he explains. “It can be spent only on strict economic development projects so it won’t help the residential market.”
Hughes adds that once the EU funds are invested post-2015, the fund will be able to evolve.
The future of the region’s delivery vehicles remains unclear. It has six urban regeneration companies that will lose all operational funding next year.
Chris Barrow, chief executive of Central Salford URC, says its £1bn development of the Chapel Street regeneration scheme will go ahead with all money contractually in place. He says that the board will decide shortly on the future of the company but he adds that the Manchester city region has become much more private sector-led in the past decade and should feel the pinch less.
Elsewhere, Regenerate Pennine Lancashire is undergoing a restructuring in order to survive. Any cash savings will be pushed into a contingency fund to keep it going post-2011 and it expects support from its local authority partners.
A decision is yet to be made on New East Manchester, while the Blackpool, Fylde & Wyre EDC, which was set up in April this year, is understood to have based some of its funding on private sector partnership.
Tim Newns, deputy chief executive of Manchester’s inward investment agency MIDAS, which also expects to survive, insists that it is not all doom and gloom for the region. He points to the North West’s strongly established city regions, the new urban development frameworks and the recent green light for a series of vital transport schemes as reasons, in these testing times, to be cheerful.
LEPs given the green light
Greater Manchester Manchester and Salford city councils, plus Bolton, Bury, Oldham councils and Rochdale, Stockport, Tameside, Trafford and Wigan metropolitan borough councils.
Liverpool City-Region Liverpool city council, plus Knowsley, St Helens, Sefton, Halton and Wirral borough councils.
Cheshire and Warrington Cheshire West and Chester, and Cheshire East councils, plus Warrington borough council.
Cumbria Cumbria county council, Carlisle city Council, plus Eden and South Lakeland district councils and Barrow, Copeland and Allerdale borough councils.
LEPS rejected
Fylde Coast Blackpool council, plus Fylde and Wyre borough councils.Lancashire Lancashire county council, Preston and Lancaster city councils, South Ribble and Chorley borough councils and West Lancashire district council.
Pennine Lancashire Blackburn with Darwen, Pendle, Ribble Valley, Burnley, Hyndburn and Rossendale borough councils.
